PERFORMANCE

APPRAISAL
Chapter 6
PERFORMANCE APPRAISAL
DEFINITION
 It is a regular review of an employee's job performance
and overall contribution to a company.
 Also known as an "annual review," "performance review
or evaluation," or "employee appraisal,“
 It evaluates an employee’s skills, achievements and
growth, or lack thereof. Companies use performance
appraisals to give employees big-picture feedback on
their work and to justify pay increases and bonuses, as
well as termination decisions.
 It can be conducted at any given time but tend to be
annual, semi-annual or quarterly.
OBJECTIVES OF
PERFORMANCE APPRAISAL
1.It provides information upon which promotion, transfer,
demotion, layoff, discharge, and salary decisions can be
made.

2. It provides an opportunity for the supervisor and his/her

subordinates to review and identify their strengths and
weaknesses or work related behavior.

3. It forms the basis in identifying the training needs of

OBJECTIVES OF
PERFORMANCE APPRAISAL
4. It allows easy monitoring and supervision.

5. It helps evaluate the individual’s share relative to the

team’s contribution in achieving the organization’s goal.

6. It provides information to evaluate effectiveness of

selection and placement decisions.
INDICATORS OR MATRIX
THAT CAN HELP MEASURE
EMPLOYEE PERFORMANCE
According to Hakala, a manager or supervisor can use the
following indicators of performance to appraise subordinates.

1. Quantity – The number of units produced, processed or

sold is a good indicator of performance.

2. Quality –The percentage of work output that must be

redone or is rejected is one indicator of quality.

INDICATORS OR MATRIX
THAT CAN HELP MEASURE
EMPLOYEE PERFORMANCE
3. Timeliness- How fast work is performed; it might be the

number of units produced per hour.

4. Cost effectiveness –the cost of work performed should

be used as a measure of performance only if the employee

has some degree of control over costs.

5. Absenteeism/tardiness – An employee is obviously not

performing when he or she is not at work

 INDICATORS OR MATRIX
THAT CAN HELP MEASURE
EMPLOYEE
6.
PERFORMANCE
Creativity – supervisors and employees should keep track of
creative work examples and attempt to quantify them.

7. Adherence to Policy- deviations from policy indicate an

employee whose performance goals are not well-aligned with

those of the company.

8. Gossiping and other Personal Habits – They may not seem

performance related to the employee, but some personal habits

can disrupt job performance and interfere with the performance
 WHO SHOULD EVALUATE
PERFORMANCE?
1. Manager/Supervisor Appraisal – Performance appraisal done by

an employee’s manager and often reviewed by a manager one level

higher.

2. Self-appraisal – The employee appraises his or her own

performance.

3. Subordinates Appraisal –is an evaluation tool whereby

employees assess the performance of their supervisor. 

4. Peer Appraisal - refers to an employee performance assessment

 WHO SHOULD EVALUATE
PERFORMANCE?
5. Customer/Supplier – customers, vendor, or suppliers can be

potential evaluators. This kind of appraisal would be more

relevant for service-oriented companies.

6. Team appraisal – Similar to peer appraisal in that members of a

team, who may hold different positions, are asked to appraise

each other’s work and work styles. This approach assumes that
the team’s objectives and each member’s expected contribution
have been clearly defined.
 WHO SHOULD EVALUATE
PERFORMANCE?
8. 360-Degree or Full circle Appraisal – The employee’s

performance is appraised by everyone with whom he or she

interacts including managers, peer, customers, and members of
other departments.
PERFORMANCE APPRAISAL METHOD
Multiple Person Evaluation Method

1. Ranking Method - ranking the employee from the most efficient to the
least capable on each trait or quality to be used in judging the employees
performance or just simply ranking the employee from best to worst.
PERFORMANCE APPRAISAL METHOD
Multiple Person Evaluation Method

2. Paired
Comparison Method
– consist of asking an
evaluator to consider
only two individuals at
one time and to decide
who is better.
PERFORMANCE APPRAISAL METHOD
Multiple Person Evaluation Method

3. Forced Distribution – the rater is

asked to rate employees in some fixed
distribution of categories such as poor,
below average, average, good,
excellent. This system is based on social
science statistics of the normal curve,
which presents a bell-shaped graph
where one end of the scale represents
the best job and the other ends
represents the worst performance.
PERFORMANCE APPRAISAL METHOD
Individual Evaluation Method

1. Critical Incident
Method – This
method manager
writes down positive
and negative
performance of
employees
throughout the
performance period.
PERFORMANCE APPRAISAL METHOD
Individual Evaluation Method

2. Checklist and Weighted

Checklist Method – This
method prepares a large list
of descriptive statements
about effective and
ineffective behavior on jobs.
If the rater believes that the
employee possess a trait
listed, the rater checks the
item; if not, the rater leaves
it blank.
PERFORMANCE APPRAISAL METHOD
Individual Evaluation Method

3. Graphic Rating
Scales –The scales may
specify five points, so a
factor such as job
knowledge might be rated
from 1 (poorly informed
about work duties) to 5
(has complete mastery of
all phases of the job)
PERFORMANCE APPRAISAL METHOD
Individual Evaluation Method

4. Behaviorally
Anchored Rating
Scales (BARS) – This
method is used to
describe a performance
rating that is focused on
specific behaviors or
sets as indicators of
effective or ineffective
performance.
PERFORMANCE APPRAISAL METHOD
Individual Evaluation Method

4. Management by objectives (MBO) – MBO is a process in which managers and

their subordinates set objectives for the employee to achieve within a specific rating
period.

MBO focuses attention on what must be accomplished (goals) rather than how it is
accomplished (methods). Reward is given based on the result or output.

5. Multi-Rater Assessment or the 360 degree Performance Feedback – The

360 degree feedback is a system or process in which employees receive
confidential, anonymous feedback from people who work around them, their
immediate superior, peers, customers, or suppliers.
SOME PROBLEMS
ASSOCIATED WITH
PERFORMANCE APPRAISAL
1. Bias - prejudice in favor of or against one thing, person, or group
compared with another, usually in a way considered to be unfair.
2. The Halo effect -It is a situation where you let your positive or negative
feelings towards an employee to influence your evaluation easily. 
3. Leniency and Severity tendencies - this means that some managers are
too lenient and will end up appraising all employees above average,
others will give average whereas others would provide below average.
4. Recency effect- recent events tend to have an unusually strong
influence on performance evaluation.
5. Attribution error - It involves making your independent belief on
possible causes of some behaviors or outcome and letting that
influence your judgment.